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Sunday, September 20, 2020

AGR dues from telcos: Spectrum value erodes, govt on a sticky wicket

If an operator like Vodafone Idea (VIL) does not get to pay its AGR dues of Rs 58,000 crore in deferred installments of 15-20 years as it has sought, it may have to file for bankruptcy and then the Centre stands to lose over Rs 2 lakh crore.

By: ENS Economic Bureau | New Delhi | August 24, 2020 3:18:17 am
AGR case, AGR case Supreme Court, AGR case verdict Supreme Court, Supreme Court AGR case verdict, India news, Indian ExpressOn September 1, the Supreme Court, in its final judgment on the AGR issue, said telcos could pay their AGR dues over the next 10 years and that they would have to pay 10 per cent of the dues by March 31, 2021.

Whichever way the adjusted gross revenue (AGR) case concerning telcos goes, the ultimate loser will be the government. This is because the value of spectrum which is currently with the telecom operators — their main asset, of course on lease from the government – has diminished.

If an operator like Vodafone Idea (VIL) does not get to pay its AGR dues of Rs 58,000 crore in deferred installments of 15-20 years as it has sought, it may have to file for bankruptcy and then the Centre stands to lose over Rs 2 lakh crore. The value of liberalised spectrum with VIL currently — for the balance licence period — stands at around Rs 98,206 crore based on the latest reserve price worked out by the Telecom Regulatory Authority of India (Trai) for the next round of auctions.

VIL owes the Department of Telecommunications (DoT) around Rs 2,45,934 crore if all of its dues are taken into account. Its dues on account of deferred installments for spectrum it bought in various auctions is Rs 1,82,222 crore. This amount is payable till 2036. Further, its dues on account of one-time spectrum charge is around Rs 5,712 crore. Add to this the Rs 58,000 crore of AGR dues.

The Trai and DoT have largely been at fault for the situation where the Centre cannot cover its dues with the spectrum the telcos have. Even if the DoT gets back the spectrum from insolvent telcos like Reliance Communications (RCom) and Aircel, as it is arguing in the Supreme Court, it won’t be able to recover its AGR dues.

For instance, the AGR dues of RCom is around Rs 26,000 crore and the value of its spectrum based on its remaining licence period is Rs 12,983 crore. Similarly, the AGR dues of Aircel is Rs 12,389 crore and the value of its spectrum is Rs 4,965 crore. Even if DoT gets back the spectrum it will have to put it up for auction to recover its dues. Here, since the timing of auctions which remain uncertain because of the poor financial health of the operators, the value of spectrum would only further diminish. —FE

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